Wednesday, July 24, 2013

London Prime Property has become an international asset in the same way as any other tradeable asset from gold to bonds. It may be that the majority of properties in Zone 1 are now owned by foreign non residents. Syrians and other Arabs, Russians, Chinese: the London Property market has attracted speculators from around the globe. Increasingly, however, these new owners do not let these properties, they simply leave them empty. Walking in some central London neighbourhoods at night is a sobering experience- there are few lights on, and the economic impact is growing ever more severe.The reasons why London Prime property became so attractive are many and varied, but the primary reason is that the UK does not tax these empty properties. Council tax is not levied when no one lives at the property, and Capital gains and VAT can be avoided very simply.This gross distortion of London Prime property prices is destroying the city and the country. As George Osborne seeks to reflate the property bubble, the fact is that this may simply lead to significant transfers of wealth away from the UK. I have rarely seen a more obvious case where a land tax should be levied. It is ridiculous at a time of major housing shortages in the UK to permit such a significant portion of the housing market to simply lie idle. In my view, apart from a land tax, foreign non-residents who own UK property should at least pay a punitive capital gain rate: announced early enough this might provoke major activity and begin to de-stress the property market and create more normal investment conditions. As the rest of the UK market stagnated, London Prime has doubled over four years: this is insanity caused by our failure to tax efficiently and it is time that some of these ill-gotten gains were returned to the UK.

Tuesday, July 23, 2013

It is customary for the UK to get a bit Maiden Aunt at the news of a royal birth, and sure enough the pages of saccharin nonsense that cover the front pages, and indeed most of the middle pages, of the London press today completely conforms to type. Steely-eyed literary bitches with the morality of Caligula and a usual turn of phrase as uncompromising as nitric acid have suddenly turned into cooing imbeciles around the Royal pram. At least you know that these journalists are being moved to such soppy heights by something they hold most sacred of all: money.So the endless articles about "Our Future King" whose star sign (Leo, apparently) will apparently guarantee him to be a good King and whose ineffable good breeding will make him endowed with the best blessings of existence, but still some how, you know, normal, will doubtless continue for a few days. The fact is that covering the Royal birth is so cheap, and thus TV, print media, Twitter and the rest of it will cover the story in depth. Meanwhile in eastern Congo where a difficult-to-explain war now rages, will receive the customary indifference, as will the latest outrages of the tyrannical Vladimir Putin- after all journalists pay a price of death in Russia that the side streets around St. Mary's Paddington do not usually exact. Doubtless there is plenty of RT coverage of the happy event too.What kind of strikes me, is how presumptuous the whole coverage is. Since Prince William is a deal younger and doubtless fitter and much better looked after than I am, the fact is that Baby Windsor is not very likely to be my future King in any event. Yet the assumption that the Monarchy will continue unchanged into the twenty-second century seems to be a fairly debatable point too. Conservative Monarchists, like David Cameron, hope and believe it will, but the lesson of the last century is not too comforting for them. Edward VII was a fornicating voluptuary whose behaviour broke marriages and was the despair of his government. George V, described by HG Wells, as presiding over an "alien and uninspiring court", was an unbending martinet who terrorized his children, while Edward VIII was such a dreadful king that he was forced out. Had any of these Kings faced the kind of coverage that the latest heir has already received, then it is a moot point how popular they would have been.For sure King George VI, the Second World War and the current Queen have certainly rescued the Monarchy in the national affections, but in an increasingly democratic age, can we be sure that the compact that they achieved is even possible in the prospective reigns of Charles III, William V, and onwards? Certainly if the Queen had behaved in the same arrogant and high handed way as both her sister, the late Princess Margaret, and son, the Duke of York have been know to do, then the popularity of the crown might be dramatically lower. The fact is that no one can say for sure if the dynasty can continue to earn the same level of support and respect in the future that it has at the moment, and it has to be earned. Queen Elizabeth II has given her subjects a deal where she expresses so little in public that we can more or less project anything we like onto her: she is a kind of cipher for national expectations. That trick is easier to pull off if you have grown old in the wearing of the Crown- it will be far harder for an elderly man, who is known to his future subjects, if at all, for some slightly cranky personal eccentricities and having the money and time to indulge them. Then comes back the old Monarchist chestnut: "would you have wanted Tony Blair or Margaret Thatcher as President?". To be honest it is hard to see how such polarizing figures would even have wanted the job, but I can certainly think of political or cultural figures that could serve well as the (temporary) constitutional figurehead. From Judi Dench to Martin Rees, from Zadie Smith to Richard Branson there are plenty of figures who can serve as the ring master of the political circus or as the dignified embodiment of our country. More importantly perhaps, the fact is that the Royal birth means it may be at least another century before the Royal Family provides another female leader, and somehow Britain seems to feel more comfortable with a woman. Across Europe and around the world there are or have been figures, such as Vaclav Havel of the Czech Republic, Nelson Mandela of South Africa, or President Joachim Gauck of Germany who have huge international prestige and moral authority, which they have acquired through sheer force of personality as opposed to simple longevity in office.Even more to the point, at least in a democracy we would have the choice of mediocre leader, instead of being forced to accept whatever mediocre leader the act of settlement and the Royal family can provide.So as the media Greek chorus responds to the Royal birth with raptures and rubbish, I find myself asking whether the attack dogs can be held off for ever. Would it not simply be prudent to question whether the Monarchy- with all the overhead of flummery and snobbery, and all the lickspittle arse-licking- might not be best cast into a dignified retirement before this baby is confronted with the unedifying prospect of having all his natural responses analysed or twisted, and who will be treated in a way that more or less will guarantee to deform his personality.

Tuesday, July 16, 2013

The Ipsos Mori poll published last week showed a perhaps surprising amount of simple ignorance amongst the British Public. In major areas of public policy, it seems that large numbers of people do not have even a most basic understanding of the data behind the issues of the day. Alex Massie in the Spectator put forward the idea that this ignorance is why some kind of political class is necessary. Robert Sharp at Liberal Conspiracy rebutted this, making the fairly valid point that the ignorance on display can in fact be blamed on media failures as much as educational or political ones. The Liberator Blog, rightly points out that the ignorance of the Public does not let politicians off the hook.So where does this shocking display of political ignorance leave us?Aside from the structural failures of education, I think it clearly does underline the spectacular failure of the British media to either inform or educate- and the failure of the British public to ask the right questions, but it also opens up a whole raft of issues to do with our democracy too. At the moment the issue of MP's pay is a political hot potato and there have been a variety of proposals- including Richard Branson's idea that MPs pay should be improved substantially, but that the numbers of MPs should be reduced. As an aside I note that most national journalists earn a fair bit more than a backbench MP does, but they have been more than happy to pander to the visceral witch hunt response that MPs should not really earn anything at all. Of course one major source of added income for MPs is journalism, and several significant political figures earn large sums to top up their Parliamentary pay. All of this does rather get in the way of a sensible debate about what the role of MPs really is- or should be- and yet this role lies at the heart of our democracy.As a Liberal, I share the view that the mistakes of economic and public policy that have been made since the Second World War have their roots in the very fabric of our constitution. In the eyes of most Liberals the closed shop of British politics has prevented new ideas and necessary change from entering the system, and unless and until greater competition forces change upon the system, then the British government will continue to grow ever more sclerotic. The failure of both journalism and politics to explain even basic facts to the electorate does not make me optimistic that such radical change can be made attractive, however necessary it is. Even still, I think it is incumbent upon Liberals of all persuasions to stand up and speak for ideas which may not merely be unpopular, they may not be even understood. I shall continue to speak up for radical reform, and just hope that the public ignorance on this and, as it turns out, on so many other issues can finally be defeated.

Thursday, July 11, 2013

In nineteenth century Russia a perennial theme of commentators was "What is to be done?". In pamphlets, articles and even novels, the question "What is to be done?" is endlessly repeated- notably by Lenin. The crisis of Czarism was obvious, and yet the solutions were not so clear, and in the end the breakdown of Czarist autocracy led to the totalitarianism of Stalin and the murder of millions on a scale that would have been beyond the comprehension of even the most absolute of the Czars.Now in Russia the question "What is to be done?" is being asked again.The kleptocratic system that has replaced the faded brutality of the Soviet Union is no more responsive to the winds of freedom than its predecessor. All of the KGB instincts of Vladimir Putin, honed under the stagnant tyranny of Brezhnev, rebel against even the most basic of Western Democratic freedoms. On almost every issue, the gangsters and spooks who have shared the spoils of Post Soviet Russia now stand directly against the West. Whether in their determination to support the bloodstained and gory regime of Bashir Al-Assad in Syria, or their attempts to subvert democracy in their neighbours, or their contempt for rule of law, Russia has become a pariah state.In the past 48 hours alone we have seen the grimly comedic results of the brutal arrogance of modern Russia: a dead man is convicted of trumped-up charges; any aspect of being gay renders even tourists liable to detention on further trumped up charges; Russia has vetoed the establishment of a fisheries protection zone in the South Atlantic. These are just the latest outrages in a country that is now categorized by Freedom House as "Not Free". Meanwhile Mikhail Khodorkovsky has just marked 10 years as a political prisoner in a prison near Murmansk.Yet despite the clumsy brutality of those schooled by the camps of the Gulag- whether as jailers or indeed as former prisoners, the regime of the Chekists is failing, just as its Czarist predecessor did. In the end the contempt that the regime shows for rule of law has eliminated most potential investors who could help renew the shattered post-Soviet economy. A reliance on oil and gas, and specifically the use of the "gas weapon" has led to a backlash, and the frantic diversification of supplies by the major markets of Gazprom. Qatari LNG and US shale gas have severely weakened Russia's hold on the EU energy market. Meanwhile ever fewer Western majors regard Russia as being worth the risk, so production stagnates. Meanwhile, after the failure of Gazprom as a super major, the creation of Rossneft as an oil replacement is hampered by the heavy level of debt which has been required to create the group. The company can not expand beyond Russia, and can barely finance the fields that it controls within Russia.And really Russia only has commodities. Yet coal is far less attractive these days, gold: ditto, even silver and platinum group metals are expensive to mine in a society where almost everything needs a bribe. Meanwhile manufacturing in Russia has to cope with a Rouble made stronger by the sale of oil and gas: Russia has the "Dutch disease", yet unlike the Netherlands it has no strong brands or quality industry that can compete even if the currency was at more normal levels. The Russian economy- far from being a dynamic source of growth- is being crushed by the incompetence and corruption of the Kremlin. Over three million entrepreneurs have been imprisoned in the course of the last ten years, and perhaps another million potential business leaders have fled the country.All that is left is the increasingly troll-like figure of Vladimir Putin and the Siloviki regime that he fronts, and it is a disastrous failure. Putin, at 60 is an old man in Russian terms. Despite his Berlusconi-like PR stunts- and probable cosmetic surgery- it is clear that the regime is well past its sell-by date. Although the huge protests that greeted his clumsy transfer of power back to the Presidency have died down, there is little doubt that Russian society remains deeply resentful of the stolen election with which Putin intended to cement his grip. At any time- as in the late Czarist times- a new wave of protest could arise to challenge the fragile regime. The "Mubarak scenario" is widely discussed in the parties and salons of the politically connected in Moscow.So then, to coin a phrase, "What is to be done?"From the point of view of the West, it seems that, as usual in their relationship with the Kremlin, they always prefer to deal with the devil they know, whether that devil is Gorbachev, Yeltsin, or even Putin. Yet, as so many times before, it is a blinkered policy. The Kremlin under Putin is a proven enemy of the West- it seems perverse to treat such a regime in any favorable light. The increasing repression in Russia will make it ever more difficult for Western governments to ignore popular disgust with Russia among their own electorates. Indeed the militant gay rights lobby is well organised and well funded, and in the absurd "Gay propaganda" laws that Putin has just passed into law, they have a very obvious target: and through a boycott of the Sochi winter Olympics a very obvious means to apply pressure.Yet these may be mere pinpricks. Now Russia has Edward Snowden, they also have a means to dissuade the US from formal action against them. Nevertheless, as the cold war of spies continues between Russia and the West, the West will be forced to take more public and firmer steps against the Kremlin. Dusting off George Kennan's policy papers on "Containment", would be no bad start. Furthermore, the West should match the tough rhetoric of Putin with some of its own. The frozen conflicts in Moldova and Georgia allow Russian troops to interfere in the internal affairs of those two countries- they should rise further up the international agenda, if only to embarass the expansionst designs of Russia in the Caucasus. The Russian contention of a sphere of interest in the Post Soviet space should also be resisted, as it becomes clear that Ukraine and even Belarus are now more firmly in the Western economic orbit than the Russian one.Meanwhile Vladimir Putin might reflect that Czarism was once defined as: "Autocracy, mitigated by assassination", and hope against hope that no one on his own side is thinking the same thing.

Friday, July 05, 2013

The advent of still further protest in Cairo, which has now sparked a military coup, might be seen as just another of the convulsions shaking the Islamic world. The Islamist government in Ankara continues to face public outcry and even in Iran, the election of a relative moderate is seen as a significant defeat for the ultra-conservative "supreme leader" of the Islamic Republic. It is easy to dismiss these convulsions as just another example of the instability of the Islamic world in general and the Near and Middle East in particular.Some wiseacres now suggest that the revolutions in North Africa have been a wrong turn, and that the dictatorships that preceded them were somehow better, since they provided stability and order as opposed to chaos and violence. Personally I find it quite hard to share this opinion. The fact is that the largely military regimes provided the stability of the grave and were long past their sell-by date. The fact that such violence has exploded after the fall of Mubarak et al is a sign of the total failure- not success- of those regimes- they lacked the flexibility to deal with rapid social change with any response beyond repression. Sooner or later repression fails- as it has across the Arab world over the past four years.As messy and difficult as they are to achieve, the only solutions for the problems of the Arab world are political ones. Thus, the military coup in Egypt is unlikely to be successful, albeit that the military acted with the support of the mob. Mobs are notoriously fickle, and the removal of President Morsi by force- even allowing for the disputes over his own democratic mandate- now leaves some serious questions which the military will struggle to answer: in particular, how Egypt can move towards a more democratic and pluralist government that can address the deep social and economic problems of the country. That the most populous Arab nation is undergoing such convulsions does not bode well for the wider Arab world.Now the Muslim Brotherhood, which provided the platform for the Morsi government, can genuinely claim that their legitimate political program has been the subject of repression- and even after the coup, millions of Egyptians still support the policies of the now deposed regime. I note that today rallies are being held in defiance of the coup- and I suspect that the violence used to turn out the Morsi government will now be turned against the new regime.Sooner or later there will need to be a national council and reconciliation- I can only hope that this does not come after a civil conflict on a scale we have- so far- not seen in Egypt. The warning of Syria stands before us, and an Egyptian conflict would be very likely to move way beyond the country's borders.